Replies to post #145494 on Zeev's Turnips Patch-No Politics (ZEEV)

[DlphcOracl]

Killian: Here's a hint.

Doubling up on a bad (losing) trade is almost always a poor decision and an invitation to turn a manageable loss into a disastrous one. Remember: the only thing worse than making a mistake is prolonging it.

[Zeev Hed]

You are doing the typical small trader deal, kneeling and praying" Almighty, just get me out a "whole" (or even as you say) position, and I won't do it again", in the meanwhile, your funds are locked and not used to play other games that may be more successful. You got to take the loss, and if you are stubborn, get it back from the MM's at a new level. Personally, you are chasing a trophy, SNDK is a snorter and should not be the subject of shorting until it breaks down, and even then, only if you are pretty sure that the general market is going to go your way, here, it is a 50/50 proposition.

[carl_p_r2]

Regarding averaging down, or doubling up on a trading position, there is no problem with doing that, so long as you plan your trades and trading size accordingly, and that is your plan in advance. Thus, if you are willing to commit $50,000 to a position, and you want to leave open the fleixibility of averaging down, then your initial purchase should be for no more than $25,000. If you want to leave open the flexibility of taking up to four positions, then each should be no more than $12,500. If you note, Zeev trades about 2000 stocks at once - LOL, actually probably 12-20. He also averages perhaps 50% cash. Thus, I expect that each trade is in the range of 1-2% of his equity. Thus, even if he takes four helpings of a stock, the position will only account for about 4-8% of his equity, which is not enough to paint himself into a corner.

If the initial position is more than 5-10% of your equity, I would definitely not double up.

Carl